He expects a third-quarter loss of $2.68 a share, which is a sharp contrast from the previous profit outlook of 33 cents a share. Mayo also widened his loss estimate for 2008 to $6.55 a share from $3.40.

He cut his 2009 earnings estimates to $2.75 a share from $3.10 a share.

However, Mayo maintained a "buy" rating on the stock, saying the price target had attractive return potential.

Shares of Lehman were down 6.4 percent at $15.17 Wednesday midday on the New York Stock Exchange. (Reporting by Amiteshwar Singh in Bangalore; Editing by Bernard Orr)